Why Esports will be Next Big Thing in India: An Investor’s Guide

Esports, short for electronic sports, is a form of competition using online video games. Esports often takes the form of organized, multiplayer video game competitions, particularly between professional players, individually or as teams. It has become increasingly popular in recent years, especially since the onset of Covid-19 and is showing no signs of slowing down anytime soon. Also, because of the large young population and nativity to the digital space in India, the industry has seen tremendous growth since 2019. With an increasing number of tournaments and active participation, India is slowly moving up the ladder to become the frontier of organised Esports tournaments in the global industry. According to a recent report by KPMG, the market is expected to grow to a whopping INR 11,900 crore by 2025.

This growth is being driven by several factors, including the increase in affordability of smartphones which is projected to reach 253 million units by 2027. Since the past decade, India has emerged as the centre of innovation for the electronics industry, resulting in lower cost of production and therefore, comparatively lesser priced handsets available in the market. This allows low barriers to entry for the hopeful youth into the space. The growing availability of high-speed internet and reduction in costs of data plans helps the case even further. The rising trend in e-gaming competitions in India due to increase in demand and growing investments by big conglomerates and organisations has immensely helped in penetrating the untapped market and raising awareness for the same. The investments have also helped support the teams  in improving the digital infrastructure. The credit is also due to an influx of celebrities and influencers engaging with and promoting this industry, especially big names like Sachin Tendulkar, Virat Kohli, and Badshah to name a few. Another factor that is driving the growth of the Indian esports market is the rise of online gaming platforms. These platforms make it easy for gamers to connect with each other and compete in online tournaments. Some of the most popular online gaming platforms in India include Battlegrounds Mobile India, Free Fire, and Call of Duty: Mobile. According to a report by the Indian Gaming Federation, the number of gamers in India is expected to reach 628 million by 2025 and is further projected to multiply in the coming decade. To boost the growth even further, on 23rd December 2022, the Indian government officially recognised esports as a part of multi-sports events. The Government of India, amended the rules and ordered India’s Department of Sports, which falls under the ambit of India’s Ministry of Youth Affairs and Sports, to act as the nodal agency for esports in the country. Esports’ inclusion in the multi-sports category by the Indian government also means that the recognised esports tournaments might attain the same status as other offline sporting events in the country, like national-level tournaments.

With this exponential growth, a big investment opportunity has been created in the space with a hopeful future and promising returns so far. This has just started to pick up steam but the numbers already look quite promising with India being the second largest gamer base in the world. The industry has been growing with a CAGR close to 20% and is expected to grow at the same pace. The revenue is forecasted to grow at a lucrative 32% through 2027. According to Invest India, venture capital funding for Indian gaming startups stood at $350 million between 2014-2020 and it is growing at a CAGR of 22%. Marquee VCs like Sequoia, March Gaming, Accel, Kalaari, Legatum Capital, Goal Ventures, Blume, Steadview, Matrix and others have made significant investments in the sector. The space has been open to retail investors as well and the investments can be made through various sources. Investing in esports teams has been a popular option for investors, as it allows them to get involved in the competitive side of esports. Another popular option for investors is to invest in esports tournaments, as it allows them to capitalize on the growing popularity of esports tournaments. Although, the barrier to entry is high in this option as it requires a considerable amount of capital to participate and the risk is equally high. The other popular and safer option is to invest in gaming infrastructure which includes investing in digital platforms, hardware, and other SaaS services.

As with any investment, there are risks associated with investing in the Indian esports market factoring in the volatility due to the industry being at its growth stage. Although the government has recognised the space, the grassroot implementation of the regulations still has a long way to go. The gaming infrastructure is also improving day by day but it is concluded that we still have some time to go till we land on something extremely reliable. Overall, the Indian esports market is a promising investment opportunity for investors who are looking for a new and exciting industry to invest in. It can be a comparatively riskier space to invest in when compared with the already matured and conventional industries, but it compensates well with the significant historical returns as evident throughout the years. Given the industry is at its early growth stage, there is no better time than now to ride the wagon and watch India climb to the front in the global stage of esports.

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